National Living Wage: The people who aren’t entitled to it

By Karl McDonald

Published:10:21Wednesday 12 October 2016

Brexit is likely to knock 10p off the National Living Wage next year, according to research by the Resolution Foundation.

The weaker pay outlook in the face of economic uncertainty is likely to cut 10p from the wage, which was brought in at £7.20 an hour in April and was set to rise to £7.60 next year. But not everyone is benefiting from the rise as it stands.

Religious communities

Nuns are exempt from the Living Wage (Photo: Getty) Nuns, monks and similar have been exempted from the minimum wage law since its introduction by Tony Blair’s government in 1999. Work for the community for any faith registered as a charity doesn’t count.

Prisoners

Up to 83 prisons in England and Wales are involved in public/private partnerships where companies supply materials and then pay prisoners £40-£50 per work. Those employed by the prison itself earn a token wage, between £7 and £12. That won’t change with the new law.

Share fishermen

Many fishermen are paid as a share of the earnings from the catch made on a journey. They’re categorised as self-employed by the government – each fishing trip counting as a joint business venture rather than a waged job.

Members of the armed forces

The Department of Defence says it tries to follow the “spirit” of minimum wage laws – but is exempt from following them. The Armed Forces Pay Review Body said in 2014 that some military personnel could be earning less than the previous minimum wage. The starting annual salary for a soldier in training is £14,784.

Self-employed people

If you’re paying yourself, you’re not required by law to pay yourself £7.20. Self-employed people without sufficient income may be entitled to jobseekers’ payments.

Under-25s

Even though 85 per cent of people believe they should be given the full £7.20, anyone under 25 is not entitled to the National Living Wage. Workers between 21 and 25 get £6.95, workers between 18 and 21 get £5.55 and anyone under 18 gets £4.

Workers on government employment programmes

People on work schemes like the divisive Work Programme, which places people at risk of becoming long-term unemployed in jobs, are not entitled to the Living Wage. Commons Work and Pensions Committee chairman Frank Field said the programme “deserves credit for implementing a programme which, in general, produces results at least as good as before, for a greatly reduced cost per participant” – but the two-year programme is compulsory and has been described as “workfare” by critics.

Au pairs

Anyone who lives with their employer and receives benefits like free food and rent isn’t entitled to the pay rise.

Company directors

Some company directors are paid only nominal fees, and that will remain the case.

Other exemptions

You’ll also lose out if you’re related to your employer and live with them, if you’re on a work placement from a higher education institution, if you’re a part of certain EU programmes, if you’re younger than school leaving age, if you’re on a pre-apprenticeship scheme or if you’re doing work experience. Voluntary work also doesn’t count, for obvious reasons.